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Traders Notebook - Futures Options

An Alternative Way to Trade Successfully

Traders are often afraid of SELLING OPTIONS because it seems complicated and risky. Our approach with Traders Notebook is to keep risk low and the trading simple. The fact that over 80% of options held through expiration will expire worthless gives the option seller a built-in edge. Additionally, there are a number of other tools that a trader can use to successfully sell options and bring home fat profits.

Traders Notebook takes the following approach:

Selling far out of the money options in order to reduce risk.

Using a combination of Fundamental and Seasonal Analysis.

Using chart reading for the right timing.

Using options spreads whenever needed to further reduce risk.

There are many advantages when using the Traders Notebook approach to selling futures options. Here are some of the more important ones:

Options sellers don't have to be right regarding the market direction. It is enough for an options trader to “not be completely wrong." Proper chart reading enables the Traders Notebook trades to take advantage of direction.

Far out-of-the-money options with low delta move much, much slower than the underlying market. Therefore, you don't have to hang around in front of the computer screen all day. End-of-day trading is all that it is needed. Delta is the percentage that the option moves relative to the movement of prices. A “far-out” option might move only 10% as much as the futures price, and each day the option is becoming worthless, putting that amount of money into your pocket.

An option loses in premium every day thanks to time decay, even if the underlying market doesn’t move your way. As an options seller, you can be wrong about direction as long as you are not “too” wrong.

Traders Notebook provides you with all the trading details (recommended risk, targets, motivation of the trade), and it follows all the trades on a daily basis.

The way we trade options in Traders Notebook utterly smashes the idea that selling options is a high-risk business. Most of the options advice available to traders is to get them to buy options. Why is that so? It’s because the options sellers want to sell you the options, knowing that options buyers have as high as a 75%- 90% chance of losing their money.

It is our hope that you will be wise and join the ranks of options sellers, the options traders who make the “real” money. Traders Notebook will be there to help you realize the profits that can be made selling options on futures.

"The help I think is in the comments where things are clarified for beginners and of course Andy's choices are of help in comparison to trading on your own blindly. I like most in TN the quality of advice and serious motivation by Andy to not trade stupidly (and of course by JR)."
-- V. M.

Traders Notebook

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Derivative transactions, including futures, are complex and carry a high degree of risk. They are intended for sophisticated investors and are not suitable for everyone.
There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be
fully accounted for in the preparation of hypothetical performance results, and all of which can adversely affect actual trading results.
For more information, see the Risk Disclosure Statement for Futures and Options.